PSX Crashes As Saudi Arabia Declares Oil Price War
Along with Coronavirus, Saudi declares an Oil Price War
At 9:40 am this morning, the PSX crashed. This happened as there was a 5.83 percent decline in the stock prices, and the rules state that if the KSE-30 index falls 4 percent or more, trading is stopped for 45 minutes.
After the trade resumed in the market, loss of 726 points were recovered, as KSE-100 was down by 1380 points (3.75 percent).
What is the background of the Market Halt rule?
According to the Securities Exchange Pakistan (SECP), this rule was established to deal with the panic situations. This break ensures that the traders are collect the margins and settle their trades. It also gives companies and investors a cooling period to settle down. After margins have been collected successfully, trading session is resumed.
How does the Saudi price war lead to PSX crashing?
Saudi Arabia slashed its official selling prices for April over the weekend for all crude grades to all destinations by between $6 and $8 a barrel. This happened after Russia decided to back out of OPEC+, a group of nations that include OPEC along with other producers. Saudi A plans to raise its crude output above 10 million bpd in April after the current deal to control production expires at the end of March.
Oil exploration and production companies make up 15.3 percent of the total market capitalisation. These companies also consist of 13.2 percent of the KSE-100 index with Oil & Gas Development Co. (OGDC) being the second largest stock in terms of market capitalisation.
What is happening in Stock Markets all over Asia and Oceania?
Stock Markets in Tokyo, Sydney and Manila dropped around six percent, while Hong Kong gave up 3.5 percent by lunch. Mumbai, Singapore, Seoul, Jakarta and Wellington were more than three percent down, Shanghai and Taipei fell by at least two percent and Bangkok shed five percent.
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